Just over 80% of Australians surveyed after the Reserve Bank's (RBA) September rate rise expect mortgage rates to climb further over the next year, up from 63% a month earlier, according to the Westpac–Melbourne Institute survey.
Among mortgage holders, the share is closer to 90%, and more than 40% of that group expect rates to rise by over a percentage point in the next 12 months. The Mortgage Rate Expectations Index rose 5.5% to 179.7, close to its May high of 181.
The headline Consumer Sentiment Index fell 4.7% to 80.4, from 84.4 in September. The survey of 1,200 adults ran from 28 September to 1 October, either side of the RBA's decision to lift the cash rate to 4.6%, its highest level since 2011.
Responses gathered before the decision produced a sentiment reading of 86.9. Among those surveyed afterwards, it plunged to 67.2, a reading that, across full monthly surveys, has only been recorded during the early 1990s recession.
Westpac head of Australian macro-forecasting Matthew Hassan (pictured) said higher fuel prices and interest rates were again squeezing household finances, with the standard variable mortgage rate set to exceed 9% for the first time since 2008.
"Australian consumers remain stuck in a cost-of-living nightmare that seems to have no end in sight," Hassan said.
On a $600,000 variable-rate loan, Mortgage Choice estimates the latest hike adds around $90 a month to repayments.
Housing was the exception. The "time to buy a dwelling" index rose 3.4% to 88.4, led by outright homeowners, retirees, 25- to 34-year-olds, and those earning more than $80,000 a year.
"Improvements following an interest rate rise are rare but not unheard of, particularly when buyer sentiment is already coming from a very weak level," Hassan said.
Buyer sentiment is less downbeat in New South Wales and Victoria, both at 93, than in Queensland (85), while Western Australia (71) and South Australia (70) remain well below.
House price expectations rose 4.3% to 115.1, but consumers are split. Just over 31% expect prices to fall over the next year, 18% expect no change, and 46% expect a rise.
That uncertainty comes as Cotality figures show national home values fell 1.1% in September, the sixth straight monthly decline, leaving them 5.2% below their March peak.
With the RBA's next meeting on 2–3 November, Hassan pointed to fuel costs flowing into broader prices.
"On balance, we think that a follow-up rate hike is likely at the RBA's November meeting," he said.
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